What are health tech investors looking for these days? Thes VC experts weigh in. Photo via Getty Images

It's been a tumultuous year for health technology — and venture capital investment activity has definitely been affected. Looking toward the future, a group of panelists discussed how they are investing — and what they are looking for.

The panel, which was presented in partnership with the Houston Angel Network and Cooley for Houston Tech Rodeo, featured three investors:

  • Dennis McWilliams, partner at Santé
  • Terri Burke, venture partner at Epidarex Capital
  • Farzad Soleimani, health care partner at 1984 Ventures
Here's what these professionals consider when evaluating a potential deal.

A unique idea

The idea and solution of the med tech device or digital health company is of course of high importance for the investors.

"We really look for that unmet need. What is the innovative technology or med tech that's doing something different?" Burke says. "We try to find things that are breakthrough or disruptive that aren't one of six going after the same thing."

In light of COVID-19, the panelists discussed the advancement of remote care and telehealth. Another concern amid population growth is access to primary care doctors.

"Five years from now, we're going to be short like 60,000 to 70,000 primary care doctors," Soleimani says. "The only way we can close the gap is either to turn regular doctors into super doctors, and that's going to be driven by AI and data. ... Or, enabling other providers to act more like primary care doctors."

This type of innovation is top of mind for investors. What technology can help experts like pharmacists to provide care of this sort?

"We've seen a lot of investment going into enabling other providers to act as primary care doctors," Soleimani says. "They have the training."

A strong team

Much like startups, the people power the product growth. The panelists emphasized the importance of the potential team they'd be investing in, and it's something you learn over the diligence process.

​"You want to work with people you enjoy working with, so finding the right mix of people — whether we build it ourselves and help scale up a new company or a seasoned teams comes to us," Burke says.

For Soleimani, he is specific about making sure companies have someone in the CTO role — not just a part-time developer or contract worker.

"You need to have somebody who can build the technology — I cannot stress that enough," he says. "The process is arduous, and you're not going to get there overnight."

IP and regulatory process

Investors are looking to support protected technology, the panelists say, and most of the times they want an entrepreneur to start that process earlier than you might think.

"Investors actually care and care a lot and go pretty deep to make sure that something in the idea is protectable," Burke says.

The panelists also say they want a team that understands the regulatory process that will get the technology to scale. And investors aren't scared of investing in companies going down these paths.

"The regulatory process is often times misinterpreted — it can be your ally," Soleimani says. "Just because something needs to go through the regulatory process doesn't mean it is less attractive. It just has to be the right process for it."

McWilliams says a few years ago, maybe the process was more confusing, but nowadays companies are familiar with their options.

"For the most part, most devices know what the pathway is going to be," he explains. "If a team is telling you they don't really know what their regulatory strategy is, they probably don't know what they are doing or they don't want to tell you."

The panelists acknowledged that these regulatory processes can be costly, so factoring that into the equation is important. It's also a space where surrounding yourself with the right people is important.

"I think it's important to not only know your pathway, but also what it will take to prove that out," Burke says. "That's where physician advisers can be really valuable, as well as regulatory consultants."

The right valuation

Valuation is another factor investors consider — both valuations that are too high and too low.

"There's always this question of valuation and there's always this desire to maximize your pre-money valuation on a deal, and I would say that this can often times get you in really big trouble," McWilliams says.

Consider the market and where your company capitalization stands, McWilliams adds, and make sure there's always room on either side.

Ultimately, it depends on the investor

The panelists left the audience with advice for entrepreneurs to do their homework when reaching out to potential investors. Both what kind of companies investors fund as well as what stage they contribute to.

"It's important to know what type of investor you're speaking to," Burke says.

Starting those relationships with plenty of time is also important.

"It's hard to build a meaningful, lasting relationship with an investor if you're running of cash in two months and need a decision right away," McWilliams says.

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Houston urban agricultural nonprofit gears up for opening of new farm in Second Ward

GROWING FOR GOOD

Small Places, a Houston-based urban agricultural nonprofit, is looking forward to putting down roots beyond the fresh vegetables they grow in the East End.

After securing a 40-year land agreement with Harris County, the organization, which provides produce to families facing food insecurity in the Second Ward, is expecting to open their new farm in February 2025. Small Places’ founders hope the 1.5 acres of land named Finca Tres Robles, located at 5715 Canal Street, will be the beginning of Houston’s urban farming movement.

Founded in 2014 by brothers Daniel, Mark, and Thomas Garcia-Prats, Small Places was born out of the latter brother’s desire to work on an organic farm in his hometown of Houston. After farming in Maine, Iowa, and Nicaragua, Thomas had hoped to manage an urban farm but was unable to find a place. He then roped his brothers, who had no agricultural background at the time, into creating one.

“I joke that my journey in agriculture started the day we started out there. We didn’t grow up gardening or farming or anything of the sort,” says Daniel, Small Places’ director of operations. “It was a big learning curve, but how we approached it to our benefit was through our diverse set of backgrounds.”

Small Places began their need-based produce distribution programs through a partnership with nearby pre-school, Ninfa Lorenzo Early Childhood Center, providing food insecure families with fresh produce and later cooking lessons in 2017. When COVID-19 hit Houston in 2020, Daniel says Small Places pivoted towards becoming a redistribution center for their farming contacts who needed to offload produce as restaurants shut down, selling their crops through the organization. Their neighborhood produce program was then born, providing free boxes of produce to nearly 200 families in the East End at the pandemic’s peak.

“We found ourselves in the middle of two communities who were in need, one being people in our community who were losing jobs and were in need of food as well as our farming connections who were losing restaurant accounts,” Daniel explains.

Small Places grows a variety of vegetables at their East End based farm, selling them at a weekly farm stand. (Photo courtesy Small Places)Small Places grows a variety of vegetables at their East End based farm, selling them at a weekly farm stand. (Photo courtesy Small Places)

Small Places currently assists 65 families living predominantly within two miles of their original location and they recently restarted their programming with Ninfa Lorenzo Early Childhood Center, and accepts Supplemental Nutrition Assistance Program benefits (SNAP) at their farm stand. Daniel says once Finca Tres Robles opens, Small Places plans to bring back cooking classes and educational seminars on healthy eating for which his brother Mark, a former teacher, created the original curriculum. The farm will also have a grocery store stocked with Finca Tres Robles' produce and eventually food staples from local vendors.

“Being social and preparing a meal can be fun, interesting, and delicious. Being able to pull all of that into a program was really important for us,” Daniel explains.

Farming successfully in the middle of Houston for their subsidized programs and produce market requires Small Places’ team to be strategic in their operations. Using his background in engineering and manufacturing, Daniel says they’ve closely monitored trends in which crops perform the best in Houston’s varied, humid climate over the past decade.

They also follow Thomas’s philosophy of allowing nature to work for them, planting crops at times when specific pests are minimal or integrating natural predators into their environment. And lots of composting. Daniel says they accept compostable materials from community members, before burying the raw organic matter in the earth in between their plant beds, allowing it to mature, then later using it to nourish their crops. Daniel says he and his co-founders hope to see more community-focused, sustainable operations like theirs spring up across Houston.

“Small Places is about hopefully more than one farm and really trying to turn urban agriculture and a farm like ours from a novel thing into something that’s just a part of communities and the fabric of Houston for generations to come,” Daniel says.

Houston female-focused health tech accelerator names top companies at annual event

you go girls

A Houston organization that accelerates and supports female founders leading innovative health tech startups has concluded its 2024 program with the announcement of this year's top companies.

Ignite Health, an accelerator founded in 2017 by longtime Houston health care professional Ayse McCracken, named its 2024 winners at its annual Fire Pitch Competition in Houston last month. The companies pitched health tech solutions across lung health, renal therapy, breastfeeding tech, and more.

"This year’s competition was a culmination of passion, innovation, and hard work from the top startups in our 2024 Accelerator Program," reads a LinkedIn post from Ignite. "These trailblazing founders earned their spot on the stage by demonstrating exceptional leadership and the potential to revolutionize the healthcare industry with their solutions and devices."

First place winner was Sarah Lee, CEO and co-founder of Relavo, a New York-based company that's making home dialysis more effective, safer, and more affordable. Lee accepted awards from Johnson & Johnson and Wilson Sonsini Goodrich & Rosati.

Therese Canares, CEO and founder of CurieDx, took second place and won its awards from SWPDC - Southwest National Pediatric Device Innovation Consortium and Wilson Sonsini. CurieDx, based in Baltimore, Maryland, is creating remote diagnostic tools using smartphone technology.

In third place is Andrea Ippolito, CEO and founder of SimpliFed, a company focused on democratizing access to baby feeding and breastfeeding services through virtual care that's covered by insurance. The startup won awards from Texas Children's Hospital and Wilson Sonsini Goodrich & Rosati.

Three other finalists won other awards, including:

  • Kadambari Beelwar, CEO and co-founder, Henderson, Nevada-based Truss Health, which created an AI-powered sensor fusion platform that's designed to detect early signs of infection, won an award presented by Memorial Hermann Health System and Golden Seeds
  • Mimi Gendreau Kigawa, CEO and co-founder of New York-based Zeph Technologies, an AI-lung care company with technology for clinicians to deliver pulmonary care to patients with chronic respiratory disease, won an award presented by CU Innovations and Houston Methodist
  • Ashley Yesayan, CEO and co-founder, New York-based OneVillage, a software platform meant to support patients and family members through trying health events, won an award presented by CU Innovations

The companies were evaluated by the 2024 judges, which included: Allison Rhines, head of JLABS Houston; Andrew Truscott, global health technology lead at Accenture; Angela Shippy, senior physician executive at Amazon Web Services; Kimberly Muller, executive director of CU Innovations at University of Colorado Anschutz Medical Campus; Myra Davis, chief innovation and information officer at Texas Children's Hospital; and Winjie Tang Miao, senior executive vice president and COO of Texas Health Resources.

Houston expert: Balancing flexibility, accountability, and performance in a hybrid world

guest column

Amazon, Salesforce, and Nike are just a few companies making headlines in 2024 for requiring employees to return to the office.

At the same time, technology is evolving, automation and efficiency gains are taking center stage, and employees continue to seek greater flexibility. This has fueled the debate around the future of where work gets done in 2025 and beyond.

Proponents of a remote or hybrid work model believe it leads to increased employee productivity, higher job satisfaction, and access to a larger talent pool. Detractors have a different viewpoint – suggesting employee isolation is greater, cyber security concerns are more complex to manage, and it’s hard to accurately evaluate employee performance.

So, what’s the answer?

The future of work lies in harnessing the power of the employer/employee relationship. This involves establishing clear guidelines for what working “looks like” inside and outside the company, measuring performance tied to company goals, and holding leaders and employees accountable for how these interactions occur.

A remote work policy helps establish clear guidelines. For example, should business cameras be on for all meetings? What is considered an acceptable business casual dress code? Can pets be on screen? Addressing the issues around a remote workspace, how to interact during a meeting, and what to wear helps to define company expectations and how you would like your business to be represented.

Formal performance management tools and processes have been in place for decades. While an annual event is important, encouraging managers and employees to have regular and structured performance conversations and share transparent feedback (regardless of where they work) helps you celebrate what’s exceptionally good, acknowledge what’s on track, and quickly course correct when needed.

Accountability in the remote work environment goes both ways, and leaders must model the behaviors they expect from employees. When the rule is cameras on, that means everyone, regardless of their title. When you’ve established working hours, be available to take the call or respond to the Teams chat within a reasonable timeframe. And when you need to be away from work, set expectations for when and how to reach you.

So, where is the best place to start when updating or establishing guidelines? First, review your key business objectives and work out what’s required to support the successful achievement of those goals. Design your remote and/or hybrid model around those objectives and place employees at the forefront of that design.

If you think about it, it’s no different than being in the office. You expect your employees and managers to show up, be fully present, and hold themselves accountable. That should be the expectation no matter where you “sit.”

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Michelle Mikesell is the chief people officer at Houston-based G&A Partners.